Stimulus funds wasted in national home weatherizing program, critics say

Martha Stevenson was out of work and behind on her mortgage payments when her furnace started to go.

When Stevenson, 60, contacted the Community and Economic Development Association of Cook County, she was told workers could replace her furnace, vent her roof, insulate her attic and make other repairs to her South Holland home, all at no cost to Stevenson.

But after the contractor did most of the job, workers refused to install weatherstripping, saying they had run out of money, Stevenson said. She called Chicago-based CEDA — again and again. Two months later, inspectors found the vents on Stevenson's roof were not venting anything, records show.

The money spent on Stevenson's home is a tiny fraction of the $90.5 million federal and state officials are pouring into the nonprofit CEDA to weatherize homes for the poor, but hundreds of jobs have been plagued by workmanship problems, according to state and federal records.

As CEDA's part in the federal stimulus program heads into its final months, contractors continue to fail 1 in7 inspections, and a federal plan to fix mistakes revealed in a blistering audit last year still hasn't been completed, federal officials said.

Even with limited oversight of the work, government inspectors have found gas leaks, poorly insulated walls, missing shut-off valves and other shoddy and sometimes dangerous work, records show. Several contractors installed the wrong equipment or billed for materials that were never used, inspectors found.

And by the state doling out money to a nonprofit, which is not subject to open-records laws, officials have kept from the public how millions of taxpayer dollars are spent. CEDA refused to provide information about its contractors, some of which have lengthy records of complaints, the Tribune found.

In early 2009, President Barack Obama called for infusing $5 billion into the federal government's decades-old weatherization program to put people to work and lower energy costs. Illinois split a three-year, $242 million grant among 35 agencies, CEDA being the largest.

The stimulus program pumped so much money into weatherization so quickly that CEDA wasn't equipped to handle the explosive workload, officials told the Tribune. And the pressure was on for the program to succeed.

"This is the state where the president is from, and Illinois does not want to embarrass the president," said Dalitso Sulamoyo, CEO of the Illinois Association of Community Action Agencies, of which CEDA is a member.

John Hamilton, CEDA's weatherization director, insisted that not one dollar has been misspent and that contractors must fix mistakes or they will not be paid. Many contractors have been put on probation or have not been invited back, he said, though he would not provide examples.

"We take the quality part of it very seriously," Hamilton said.

Flood of work, money

Critics say Illinois is one of a string of states that wasted taxpayer money through weatherization programs.

"Weatherization is so vulnerable to fraud at every level," said Leslie Paige, spokeswoman for Citizens Against Government Waste, a nonpartisan group in Washington, D.C. "There's a lot of opportunity for sweetheart deals, self-dealing, all kinds of inappropriate uses of the money."

CEDA hired nearly 60 contractors to weatherize an expected 15,000 homes, about half of the state's planned total. The stimulus program more than tripled CEDA's jobs, and the agency had a pressing deadline. Illinois officials wanted work done nearly a year before the March 2012 federal deadline to use stimulus money.

CEDA trained dozens of new staff and contractors. With so many new workers, officials said they expected mistakes.

But some complaints involved experienced contractors. Parliament Builders of Chicago's Garfield Ridge community has done weatherization for nearly 25 years, yet it was criticized repeatedly in state monitoring reports.

Among the findings: A customer's dryer had a gas leak in two places, a bathroom fan was not venting outside the home, and an empty fire extinguisher was installed.

Parliament President Dominick DiVenere blamed errors on a revolving set of rules. He said he has made many homes safer and saved residents thousands of dollars in energy costs.

He was among several contractors who, along with CEDA and state officials, disputed harsh findings in an October audit, which said contractors' work was poor and their billing issues pervasive.

The Department of Energy inspector general's office sampled 15 homes, 12 of which failed final inspections when federal officials visited them with CEDA inspectors.

The problems were so troublesome the inspector general's office wanted to end CEDA's program. Hamilton said that was a "substantial overreaction." The state has significantly increased oversight, and quality has "improved dramatically," he said.

CEDA officials said the sample size was insignificant and the homes had not yet gone through final inspections.

Rick Hass, a deputy in the federal inspector general's office, defended the findings. Inspections were done when contractors reported their work was complete, he said.

While CEDA is slated to wrap up stimulus work in June, the Department of Energy officials overseeing the weatherization program have yet to fully address the problems outlined in the audit, Hass said.

State officials said they are satisfied with the level of oversight the work is receiving, noting that CEDA inspects every job. Ribley said Illinois has "gone above and beyond" what federal officials require of the state, which is overseeing 5 percent of CEDA's work. Last year, the state looked at 12 percent. Federal officials monitor 10 percent of all work statewide.

State and CEDA officials said they did what the stimulus was meant to do. They trained more than 1,000 people, and CEDA officials estimate they created about 100 jobs and their contractors up to 500.

Troubled history

CEDA hires contractors with at least five years' experience after interviews and reference checks. They don't review lawsuits or consumer complaints, Hamilton acknowledged.

The Tribune found several contractors had been sued in Cook County and federal court, accused of performing substandard work, defaulting on loansfrom CEDAand refusing to pay wages and material costs to employees and subcontractors.

Among the complaints: Workers for Oakk Construction, of south suburban Summit, repairing a senior citizen's roof allegedly walked off the job after learning they would need new wood under some shingles. The roof was allegedly left uncovered. Rain later soaked the resident's attic, the May 2010 complaint said.

Neither Oakk nor CEDA returned the senior's phone calls, the complaint said. About two months later, workers covered bare spots on the roof with nailed-on shingles, the complaint said.

Oakk President Alex Nitchoff said the resident did not qualify for a roof and workers covered the roof with a tarp for free.

Nitchoff said of the weatherization program, "Is everything going to be 100 percent perfect? I probably would say no. I think overall the program has done a lot of good for needy people."

In a 2007 complaint against CEDA and Parliament Builders, a resident said the contractor gave him the wrong size furnace and that a subcontractor allegedly created a water leak after pulling away vinyl siding to insulate walls. The resident sought help after the contractors and CEDA did not return his calls for months, the complaint said.

Hamilton told the attorney general's office that Parliament gave the resident a larger furnace after he complained and that the subcontractor was not responsible for any water damage.

Hamilton said he's seen at least 50 such complaints in nine years with CEDA but that they are a small portion of the work done.

"It's the nature of the beast," he said. "People don't get what they want. … We also have letters, hundreds of letters, of thanks and gratitude."

For thousands of low-income residents, the weatherization program has provided a safety net with necessary items big and small furnished at no cost. But critics contend that residents struggling to stay in their homes are just happy to get work done, and their voices often get lost in the process.

"The people served by CEDA are disadvantaged, and they can't deal with these contractors from a position of power," said Hass of the inspector general's office.

With $5 billion in stimulus money for weatherization projects at stake, federal officials called for an unprecedented level of transparency to ensure citizens knew how their tax dollars would be spent.

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